As announced yesterday, Apple CEO Tim Cook is speaking at the Goldman Sachs Technology and Interactive Conference in San Francisco. Right on schedule, he began discussing topics of interest at 7.15am Pacific, 10:15am Eastern time, just after the markets open. Originally scheduled at 4:15pm Eastern, Cook’s segment was shifted so he could be whisked more than 2,000 miles to Washington DC to sit beside Michelle Obama for the President’s State of the Union address.

Apple is streaming its chief executive’s remarks live on its Investor web site and should post the full audio shortly after the event. If you don’t have the time to sit through the whole thing, we’ve got you covered with the most interesting bits and pieces from Cooks’ presentation…

On leadership changes

With former iOS boss Scott Forstall now out of the picture and design guru Jony Ive assuming broader responsibilities that now include both hardware, software and user interface design for all Apple products, Cook said Apple has “the talent to pull this off.”

When I look around the executive table, I see superstars. I see people who are at the top of their game.

The CEO called Jony Ive the “best designer in the world”, un-retired Technologies chief Bob Mansfield the “top silicon expert in the world,” and Jeff Williams Apple’s “best guy for operations”.

We’ve known that Ive and Mansfield are Apple’s top players and trust Cook about Williams. After all, the guy was his right-hand man back when Cook was Apple’s op-chief.

On crazypants analysts and shark investors

The profound decisions we make are for Apple’s long-term health. We know people care about quarters, and we care too, but we’re making decisions to ensure Apple’s health past a ninety-day window.

On innovation

Apple’s always been famous for its vertical integration. The company likes to control the technologies that go into its products and it brings them all together under the same roof to design tightly integrated experiences.

Apple has both “the ability to innovate like crazy and cause magic” and the “desire to make the best products in the world”. Cook has “never been more bullish on Apple” and its future prospects.

Consumers want this elegant experience where the technology floats to the background and the customer is at the forefront of the experience,” said Cook. Apple designs Mac hardware, OS X and iCloud services that tie its products together.

Other companies chasing Apple in this space are starting to realize they must focus on integration and innovation. Samsung, for example, just announced it is turning the home turf of Apple into a center of its own innovation by announcing the new Samsung Open Innovation Center in Silicon Valley.

On clunky old PC software

The innovation has moved away from PC development to the tablets and smartphones. Who is making PC apps now? No one, except the usual suspects.

On quality

Seemingly forgetting about the Maps fiasco and ongoing Siri woes, Cook explained Apple isn’t about blindly pursuing market share, or even profit for that matter. The bar is set high and “the only thing Apple will not do is make a crappy product,” he explained.

Customers want a great experience and they want that ‘aha!’ moment each time they use the product, which isn’t dependent on specs. You want a fabulous experience.

The color saturation on OLED displays is awful. You shouldn’t depend on an OLED display’s color. The retina display is twice as bright. There are many attributes of a display and Apple sweats every detail. We want the best display. I think we’ve got it. We care about all of it.

He also advised online shoppers to “think twice before you depend on the color of the OLED display”.

On Apple Stores

Cook sung praises for Apple’s brick-and-mortar stores that continue to defy the economics of the retail business. These aren’t just stores, they’re almost like shrines for customers, a Disneyland for tech, if you will, he said before likening the Apple Store experience to taking a Prozac:

I’m not sure “store” is the right word anymore. They’ve taken such a broader role than that. People don’t think about Cupertino headquarters, they think about their local Apple Store, and because people think of those things, they love them.

The iPad owes much of its success to Apple’s retail outlets:

I don’t think we would have been nearly as successful with iPad if it weren’t for our stores. It gives Apple an incredible competitive advantage. Others have found out it’s not so easy to replicate. We’re going to continue to invest like crazy. The average store last year was over 50 million in revenue.

He then explained the Apple Store philosophy:

There’s no better place to discover, explore and learn about our products than in retail. Our team members there are the most amazing, awesome, incredible people on earth. It’s the best retail experience. It’s a retail experience where you walk in and you instantly realize this store is not here for the purpose of selling, it’s here for the purpose of serving.

And this:

There store acts as a gathering place. It’ a place that has an important role in the community. If you look at an agenda for an Apple store on any given day you might find that there’s a youth program going on.

You might find a local musician entertaining people in that store. It’s incredibly exciting what these stores do. I’m not even sure store is the right word anymore. They have taken on a role much broader than that. They are the face of Apple for almost all of our customers. People don’t think about the Cupertino headquarters, they think about the local Apple store.

Some tidbits related to Apple’s retail biz:

Last quarter we welcomed a 120 million people in our stores. It’s so huge that some of our stores aren’t big enough. We’re closing 20 of our stores and moving them and making them larger this year. And in addition to that 20 we’re adding 30 more… disproportionately outside the U.S. First store in Turkey gets us into 13 countries.

And your Prozac quote:

I don’t have very many bad days. But if i ever feel I’m dropping down from an excited level, I go in a store and it instantly changes.

It’s like a Prozac.

It’s a feeling like no other.

On Gorilla-sized devices

Recognizing the rush to release jumbo-sized mobile devices and competitors slugging it out on speeds and feeds, Cook said average consumers really don’t care about the technicalities:

The way companies compete is with two things, specs and price. In the camera business people say “I have the most megapixels”.

Do you know the speed of an AX processor? Does it really matter at the end of the day?

You want a fabulous experience when you use the product. If you look at displays, some people are focused on size.

Interestingly enough, the Apple boss didn’t rule out the possibility of an iPhone with a screen larger than four inches.

On budget iPhone

Our North Star is making great products. We wouldn’t do anything that’s not a great product. It’s not why we’re on this earth.

We wouldn’t do anything we don’t consider to be a great product. That’s just not who we are. That said, if you look at what we’ve done for people who are price sensitive, we’ve lowered the price of the iPhone 4 and 4S as of last September, and last quarter we didn’t have enough supply of the iPhone 4. It surprised us.

Also take a look at the history of iPod. When we started, it was $399. Now you can get an iPod shuffle for $49. Rather than cheapening, we build new products with a separate experience.

For years, people asked, “Why don’t you have a Mac that’s less than $500 or $1000?” And we worked on this, but we concluded we couldn’t do a great product at that price. But what did we do? We created iPad, which starts at $329.

So sometimes, you can take the “issue” and solve it in different ways. But North Star is always great products, not how we hit a price point.

On iPhone growth

Cook reiterated the notion that Apple is poised to benefit as the remaining 50 percent of the cell phone market upgrades to smartphones.

I believe on a longer-term basis, all phones will be smartphones. There are a lot more people in the world than the 1.4 billion people who own smartphones already out there. I see this as being one of the best markets of all time.

We have enormous momentum. That 500 million iPhones sold was from 2007 to the end of last year. And forty percent of that happened last year! There’s incredible momentum there that in a tiny amount of time we built an ecosystem that is the best user experience on the oplanet, and a major economic market for developers. We’ve paid $8 billion to developers.

iPhone is only available to fifty percent of subscribers in the world. Frankly speaking, I see a wide open field.

On iPad growth

Fielding questions of the iPad and its performance relative to other tablets, and based on reports that Apple’s tablet share shrunk, Cook quoted an IBM survey that put the Apple tablet at the top of Black Friday shopping and said Apple sold more iPads last year than Hewlett-Packard sold PCs.

Cook has no idea what the iPad’s market share is because “we’re the only company that reports how many units we sell“.

I think the tablet market will be huge. It is a huge opportunity for Apple. It is one of those areas that show – what I mentioned earlier – of software and hardware services being integrated and creating an experience that is jaw dropping.

In context, HP, the world’s largest PC seller, sold 15 million PCs. There were more iPad sold than HP sold of their entire PC lineup. So, there has been a change here. We’re in the early innings of this game.

And Apple’s embarked nicely on the post-PC trajectory because its tablet is being picked up by many people who’ve never owned a computer before. And for those types of users, Apple offers experiences unmatched by its rivals, he said:

If you look at what we bring there, we worked on our experience. Over 300,000 apps take advantage of the canvas that is iPad. Other guys only have a few hundred. We have a big lead in this area.

Apple’s been taking lots of beating lately by both big media and analysts who fear that the company’s best days are over because it isn’t growing as rapidly as before.

“Apple has made products for years that people didn’t know they wanted and now they can’t live without,” Cook explained and then added, “We don’t believe in limits.”

On bold acquisitions

Cook says Apple has recently been snapping up smaller companies at a rate of about one new company every other month. And because “we really like to control the primary technology”, these were all basically acqui-hires, or talent-related acquisition.

Look at the last three years, we’ve averaged about an acquisition every other month. The kind of companies that we’ve push cased have been companies where ether have really smart people and or IP. Generally speaking, in many cases, we’ve taken something that they’re working on and moved the skills to work on something else.

Cook describes Apple’s thinking by outlining how the company decided to buy chip experts PA Semi a few years back:

With PA Semi we were in the process to design the engine that is in today’s iPhone. We took the incredibly skilled group of guys and used them to supplement the staff off Apple to work on the iPhone, iPad and iOS device engines. We’ve done many others that are similar nature to that and will do many more like those.

That’s not to say Apple hasn’t considered putting its cash reserves to some bold use by acquiring large companies, like Yahoo! or Nokia. They did, but none of those acquisitions was a fit for Apple.

In terms of large acquisitions, we’ve looked at large companies. In each case, it didn’t pass our test for various reasons.

I’m sure we’ll look again and could do it again, but we’re disciplined and thoughtful and we don’t feel the pressure to go out and acquire revenue. If a large company can help us make great products then we’ll go over them.

Last Thursday, David Einhorn went public in his battle against Apple, telling CNBC he was frustrated with Apple’s capital allocation policy and its $137 billion cash mountain.

The investor sued Apple and the company responded with a media release that reiterated a plan to return $45 billion to shareholders over three years. “As of next week we will have executed $10 billion of that plan”, Apple wrote.

Or at least my definition wouldn’t include investing a pair of 10s over two years, and $45 billion back to shareholders, I don’t know how a company with depression era mindset would have done all those things.

Now, we do have some cash, but it’s a privilege to be in this position. That we can seriously consider returning additional cash to our shareholders. Management team and the board in very active discussion, we will do so thoughtfully.

Hi dismissed Einhorn’s lawsuit as a “silly sideshow”:

It centers on Prop 2. Right of shareholders. It’s not about whether returns additional cash to shareholders, not about how much to return to shareholders, not about mechanism to return it, it’s about the right of shareholders. In 2012, we were looking at what we could do to improve governance, one item that came out was we should eliminate a blank check preferred. Not that Apple can release preferred, but if we do it we need to go to our common shareholders.

Frankly, I find it bizarre that we would be sue for doing something that would be good for shareholders. It’s a silly sideshow. You’re not going to see a yes on 2 sign in my front yard. It’s a waste of shareholder money.

I support prop 2, I think it’s the right thing for shareholders to have the right on this, I encourage others to vote on it. but, it’s not something we’re going to spend cycles on.

The serious thing is the return of cash, how to do it, and we’re serious about that.

Prop 2 a silly sideshow. We feel so strongly that for Apple that shareholders should approve an issuance of preferred stock that common shareholders, we would go for a vote regardless. That’s the way I see it.

If you prefer a speech like Steve Ballmer does, go and listen to that microsoft presentations. But what you get is still microsoft then 😛

Marcus1571

By your definition you should probably go for something different than democracy for you could never decide who to vote for: after all, when do you have the privilege to chat in person with a candidate?

By the way, I don’t plan to meet him.

Kurt

He is a raging Apple fanatic. It’s quite pathetic.

Lordthree

You’re a raging Apple hater. Pathetic

Marcus1571

Hahahah! What are you talking about? Are you better now? Ready to read this? I like most of their products I simply don’t have much respect for the current CEO. You unflinching and blind allegiance to a “brand” is grotesque. I simply think he is not the man that should be in charge of Apple. I don’t think it’s a shocking notion.

so why did you read this article? really could careless if you like him or not

Marcus1571

Because I prefer an educated guess to a guess. I’m with Kurt on this one: he’s just boring and it seems to me he is pushing too much. When I listen to Bob Mansfield I get a completely different vibe. Oratory is a tricky art.

Good point with Bob Mansfield. But Tim Cook worked with Steve Jobs for 10 years, and really took full CEO position in very late 2011. He is the CEO of a large company, I would give him a chance, the things we saw in 2012 was mostly Steve Jobs’s work. 2013 is the year we really see if Tim Cook has made good executive decisions internally at Apple.

Marcus1571

Ok! I see your point. Let’s see theses new products from 2013. Take care and enjoy the show…. Ehm: the keynote!!!

What is there to like? You should respect the professionalism and admire his perseverance. I bet that you can’t run Apple for one day if it was up to you? Its maybe not a charismatic manager as Steve Jobs, but running Apple at all is a major achievement.

For years, people asked, “Why don’t you have a Mac that’s less than
$500 or $1000?” And we worked on this, but we concluded we couldn’t do a
great product at that price. But what did we do? We created iPad, which
starts at $329.

Except the iPad can’t do the same things as a Mac…

Carlos Buso

But it DOES do what most people use a $500 computer for.

Kurt

You need to get out more and see what a $500 computer can do. The ipad is nice and all, but it’s nothing more than an app launcher. With out a mouse/keyboard it’s never gonna be more than a consumption device. At least get a nice stylus with pressure sensitivity that Samsung devices have.

Carlos Buso

Most people that want a $500 computer just want the basics like web browsing, email and limited document editing. This is why the iPad is Apple’s response to that $500 computer.
I know very well that a $500 can do much more, heck, a $500 computer can do the same basic things a $1000 can do, its just the $1000 computer does it better.
My point is, that Apple thinks of OTHER ways to get things done. Thats why the iPad has been such a great seller. It appeals to the basic interests of the users. It does web and email well, and as a bonus it can do alot of other things. Plus it is intuitive! A $500 is not, nor is a $1000 computer. The biggest factor here is the software options. You can’t accomplish much without the right software on a PC. Add the right software and now that $500 computer costs waaay more, not to mention it doesnt run the software “great”.
Thats the thing here with Apple, like it or not they have a different way of thinking, and untill you all realize this, you’ll keep buying POS $500 computers thay will die waaay before the iPad or any other Apple product will.